AFL cost-of-living allowance will be abolished in 2017

The cost of living allowance has helped Sydney Swans attract players such as Lance Franklin. Photograph: Steve Christo/Corbis

The AFL has confirmed the cost-of-living allowance, in which Sydney clubs were able to pay players an extra 9.8% of the cap, will be scaled down over the next two seasons and abolished in 2017. The allowance will be replaced by an accommodation subsidy, to be paid directly by the league to those players earning a relatively low wage.

The threshold is yet to be determined, but the Swans' multi-million dollar recruits Lance Franklin and Kurt Tippett will obviously not be covered.

The league will also introduce a soft cap on football department spending as part of a range of new equalisation measures announced on Wednesday.

The league, responding to a widening gap between the size of football departments at its poorest and richest clubs, said it will bring in a luxury tax from the 2015 season. Instead of enforcing a strict limit on clubs' burgeoning football expenditure, the league will punish the biggest-spending clubs by taking as much as $1m a year.

The soft cap will be set at the "projected industry average spend plus $500,000" in 2015 and increase according to inflation in 2016. Clubs exceeding this limit will be taxed by the AFL at 37.5% in 2015 and 75% in 2016.

The new rule, rubber stamped at Wednesday's meetings of club presidents and chief executives, will be reviewed in 2017.

"At the heart of these measures is the fans' experience. A determination to ensure each club has the on-field capacity to compete and potentially win each week," AFL chairman Mike Fitzpatrick said. "Uncertainty in outcomes in every match is critical ... fans want to know their team can win on any day."

Fitzpatrick said the league would enhance revenue sharing but that all clubs would retain "club-generated revenue".

The on-field salary cap will be upped to $10.07m in 2015 and $10.37m the following year, with Fitzpatrick highlighting the shift to a "pure" salary cap.

Fitzpatrick revealed the league's veterans' allowance will be abolished in 2017.

The AFL will also introduce a new “banking mechanism” for the salary cap, allowing clubs to exceed the cap for a season if they spent below the limit in any of the preceding two years.

"These policies will be regularly reviewed and refined," Fitzpatrick said.

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